so you're saying that they'll take away the 401-k option
by jt (2024-02-08 18:01:35)

In reply to: It amounts to a tax break  posted by AquinasDomer

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entirely?

I don't believe that will happen. What would they replace it with?

Or are you saying that they will make it post tax and not pre tax dollars? I could sort of buy that, but I still doubt that will happen. There is a post tax option currently (Roth) and that's an even worse long term deal for tax revenues.

The main reason for these plans is to encourage people to save for their own retirement and not depend on pension plans (which are largely gone) or social security.

The analysis
by AquinasDomer  (2024-02-08 18:30:14)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

Suggests it hasn't changed savings rates and effectively reduces taxes on the money you save and then used in retirement. Even the tax deferred stuff (based on how the employer match is taxed and that retirement income is generally lower).


They cite a Danish study showing that changing the subsidy for retirement contributions for the top bracket didn't move saving very much.

"The results of this study have been well received and broadly accepted. The weight of the evidence indicates that tax incentives do not increase total saving in a meaningful way."

Per the article, the treasury estimates it loses about 120 billion by allowing defined contribution plans, ignoring Roths (see Table 1)


It's not enough to balance even social security by itself, but if you get into a crisis where we need to right size the budget fast and social security is being cut I could see it. Touching anything that really drives the budget under current political conditions is politically toxic outside of the health system. There might be 100 billion or so a year you could get at outside of an emergency (some drug pricing stuff and maybe minor tweaks in billing). You could maybe get 100 billion in tax increases outside of an emergency. And maybe 100 billion in discretionary spending cuts. But that probably just pushes off reforming entitlements a bit longer.



Taking away 401k contributions entirely is a bold move
by jt  (2024-02-08 22:37:14)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

Now, making them after tax? Possibly. But the roth is a worse long term solution.

After tax, Tax deferred, tax on growth? Maybe

Their more realistic solution
by AquinasDomer  (2024-02-09 00:42:54)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

Was setting an upper cap where you can't add more (once you hit 500k or a million) or taking away catch up contributions over an income of 100k or so. Some of their proposed compromises still get you 100 billion a year so that's something.

It'd only be viable if cuts to something else near and dear to America's heart were up for grabs.